The Biggest Mistake Millennial Investors Make

Liz Ann Sonders of Charles Schwab explains that a market crash is not the only risk. Here's how to protect against other risks as well.

This transcript has been automatically generated and may not be 100% accurate.

I ... it comes to investing in the stock market last year it brings out there but sometimes people make the mistake of ... being scared of the wrong things and Jack Otter editor of Barron's Top calm and it was an Sonders ... chief investment strategist at school schlock ... aam we often hear that the millennial generation in particular ... given the two experiences that had the tech bubble and then two thousandeight two thousandnine ... on is gun shy of investing ... should they be scared of the stock market while I I think it's understandable given you mention the those those two extreme occurrences happen within a ten year span of time and I think ... you can look back to the era of the Great Depression and how really did change the psyche of a generation of investors need to argue me be were seen as well ... the risk of course though is that ... many of these investors have gotten so conservative in their approach to investing ... that there are setting themselves up to almost guarantee another performance relative to inflation ... which means they're basically spelling of that I and and the risk then is that you um you know you not earning sufficient return ... people make the mistake I think of thinking that the risk is simply losing money in the market ... but on force and actually other risks and losing purchasing power over the long term is a big prom at no question about it now ... I think sometimes we over generalize about with millennials in every aspect of their lives had they approach their in investing how they approach how they've made and where they work and ... how they commute time and so I do think that ... especially if we continue to see ... decent gains in the stock market ... I think he'll he'll feel you capture that the hearts and minds ... of those investors is well it's not just a game for ... as long as they don't wait make a behavioral mistake of ... being conservative concert is the market is up an up and then going all in at the time to panic and rightly outright panic is not an investing strategy in either direction in or out ... on you mentioned a robo advisors aam did I we know financial advisors to object and say these are not good things my feeling is that you could do a lot worse when Ethan ... so I think ... if for some investor certainly is a place to start I think it's a it's a great vehicle because of its low cost ... the rebalancing which is such an important part of ... the investing process ... um ... it gets done automatically and I think often times when investors ... are left to their own devices they eat they will often do the opposite of what rebalancing does for you when the thousands every bouncing is if you study an asset allocation plan in your diversified across asset classes in that plan ... is set up for you as an investor based in your risk tolerance and time horizon while as asset classes move ... in terms of performance ... data to move ... in terms of the weights in your portfolio ... so when rebalancing does is it Paris back from the asset classes that have now grown in size because of outperformance ... and add to the asset classes that have underperformed and now of represent a smaller weight your portfolio but it forces investors to do ... that woman left or own devices we often go to ... is what we know we're supposed to buy low sell high but it's so hard it is hard with one telling us that has been doing well done automatically EU as the investor are not the one that has to make that decision when it's appropriate time to rebound so ... be it for says that discipline on